Thursday, April 14, 2011

Greenpeace Goes After McKinsey on REDD+

Greenpeace has released a new report titled "Bad Influence: How McKinsey-Inspired Plans Lead to Rainforest Destruction," in which the group attacks international consulting firm McKinsey for its perceived pernicious influence on the emerging REDD+ system. The focus of the criticism is the "McKinsey curve," a proprietary marginal abatement cost curve (MAC) developed by McKinsey that has become a preeminent policy tool for guiding REDD analysis and prescriptions. In essence, the McKinsey curve, like any MAC, presents the relative cost-effectiveness of different options for reducing emissions, based on certain assumptions and projections. In the view of Greenpeace, the McKinsey curve as applied to the forestry sector in developing countries suffers from a number of serious flaws and underlying biases:

McKinsey asserts proprietary rights over the curve, and does not disclose the assumptions, baselines, and calculations on which its model is built. As a result, it is not clear how McKinsey derives its calculations of forest carbon stocks, carbon flows, and abatement option potentials. This lack of transparency is particularly problematic in a field such as REDD where open measurement and verification is critical to maintaining the integrity of monitoring and payments mechanisms.

In many cases, the data that populate the McKinsey model are inaccurate, speculative, or even nonexistent.

Forest sector baseline scenarios (which help determine compensation for emissions reductions) tend to exaggerate the growth potential of extractive industries, leading to overcompensation for logging and agribusiness interests.

The McKinsey curve contains systematic biases in favor of large-scale commercial operations at the expense of subsistence farming, for example, by failing to account for the considerable implementation costs associated with REDD projects that would target subsistence agriculture.

The McKinsey model is built on several heroic assumptions regarding REDD state institutional capacity that overestimate the abatement potential of large, centralized forest emissions reduction projects.

The net result of these defects is, according to Greenpeace, "that when rainforest countries employ McKinsey to apply its methodologies to their REDD+ prospects, they are in danger of wasting money on advice that harms their own interests and threatens the biosphere. A failure to insist on adequate safeguards for biodiversity or the rights of forest-dwelling peoples, or indeed to provide a realistic assessment of the technical and economic feasibility of proposals, does not merely threaten harmful consequences for the client country, but actually jeopardises the whole future of the REDD+ concept" (p. 27).

It is hard not to sympathize with the central charge leveled by Greenpeace at McKinsey, that the confidential nature of the McKinsey MAC curve is deeply problematic when that curve becomes the basis of national forest policies (e.g., Democratic Republic of the Congo (DRC), Guyana, Papua New Guinea (PNG), Indonesia) and, in effect, global REDD policy. Certainly McKinsey has rights to intellectual property, but this must be balanced against the political and practical requirements for transparency in the formulation of international forest and climate policy. Unfortunately, much of what follows in the Greenpeace argument is intended to discredit large-scale reforestation and afforestation projects as counter to the interests of developing countries, forest inhabitants, biodiversity, and the global climate system. From the perspective of geoengineering, centralized commercial and industrial reforestation/afforestation strategies are worthy of consideration as ways to enhance carbon sinks and reduce atmospheric concentrations of carbon dioxide, and there is no a priori reason to regard this approach as inimical to social and ecological wellbeing. Surely it is possible to increase the transparency of the REDD policy process in a way that maintains openness to the potential of reforestation and afforestation to help combat the effects of climate change.